White House Derailed Negotiation on U.S. House Stablecoin Bill – House lawmakers have been unable to come to a bipartisan agreement on stablecoins legislation. Financial Services Committee Chair Patrick McHenry accused the White House of being inflexible and causing the deadlock, while the panel’s leading Democrat stated that it was McHenry who ended the negotiations.
This development follows a significant event where finance-focused lawmakers passed three bills related to cryptocurrency matters for a vote in the full House of Representatives. It marked the first occasion where laws solely dedicated to crypto topics progressed in this manner. “Today I had hoped to announce an agreement with the ranking member on stablecoins legislation,” McHenry said, referring to the committee’s senior Democrat, Maxine Waters (D-Calif.).
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“This will not be the case. It was the White House’s unwillingness to compromise that has once again brought that negotiation to a halt.” McHenry expressed his “disappointment” without elaborating on the specifics of the disagreement with the executive branch. However, it’s crucial to note that for any U.S. stablecoin bill to succeed, it must also gain support in the Democrat-led Senate.
Hence, if a bill originates solely from House Republicans and lacks bipartisan efforts, its ability to influence the other chamber might be diminished. While McHenry’s decision to move the bill forward despite strong objections from committee Democrats may garner support from fellow Republicans, it could also negatively impact its prospects of being enacted into law.
Waters said the bill was “deeply problematic and bad for America,” and that it “promotes a race to the bottom by creating 58 different licenses,” allowing issuers to potentially include a wide range of assets in their reserve and allowing large corporations such as Meta or Walmart to issue money. Waters stated that Democrats had reservations regarding the reserve provisions outlined in the bill, and there were also differing opinions between the parties concerning the extent of federal regulators’ involvement in overseeing stablecoin issuers.
“I urge Republicans to pull this extremist piece of legislation from the markup and your culture wars,” Waters added, citing the lack of oversight from the Federal Reserve and lack of provisions on diversity and inclusion. During the Thursday markup of the Republicans’ stablecoin bill, tensions ran high as Republicans pressed forward while Democrats appeared reluctant at every procedural stage.
The committee’s attempt to openly negotiate the bill’s specifics highlights the persistent deadlock concerning U.S. stablecoin oversight. Upon request for comment, a White House spokesperson did not provide an immediate response. According to Waters, both the Federal Reserve and the U.S. Treasury Department do not endorse the current version of the bill.
During the debate, Stephen Lynch (D-Mass.) proposed postponing the vote until September, asserting that Democrats had not been given adequate opportunities to present their ideas. “We have had no meaningful opportunity to amend this bill. That’s an embarrassment,” Lynch said. “We want to be heard, and we want to have input on this.” Last week, Representative McHenry (R-N.C.) introduced the Clarity for Payment Stablecoins Act, which aims to establish a regulatory framework for cryptocurrencies that are linked to the value of fiat currency.
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Stablecoins play a crucial role in the crypto markets by offering a stable asset that investors can use to trade in and out of more volatile assets. Representative Bill Foster (D-Ill.) contended that Republicans have been advocating for the preservation of anonymous payments, asserting that encouraging the use of self-hosted wallets could potentially benefit rogue regimes. McHenry has cautioned that other jurisdictions are “ahead of the game” in regulating crypto, citing the European Union’s Crypto Assets regulation (MiCA) scheduled to be implemented in 2024.